"You need to give people the license to take risks and to fail often enough to realize that they will not be punished for doing the right thing even though the outcome might not be what they expected," says Thomas Koulopoulos, author of The Innovation Zone, a study of corporate innovation. "Small failures encourage big successes."
When Koulopoulos was running Delphi Group, a technology and management consulting firm in Andover, Mass., he held hour-long innovation meetings once a week. Before each meeting a couple of employees would collect ideas and create an agenda for the conversations.
The sessions focused less on breakthrough innovations and more on continuous improvements in the business, but they helped Delphi expand its services and hit $15 million in revenues before Koulopoulos sold the business four years ago.
You don't have to drag your staff into the meeting room to get them brainstorming -- simply use their natural propensity to gossip. Each day employees at New York City executive job listing company TheLadders.com log on to an internal social network hosted by Spigit.com. They chat about what customers are saying, discuss problems with the company's Web site or with its business model -- and vote on potential improvements.
Depending on how well the group receives their ideas, Spigit users may earn points for rewards such as iPods, free lunches and laptop bags. (The reward system is built into the software.) The service costs companies $15 per user per month. Launched in November 2008, Spigit is gaining momentum with clients such as Allstate Insurance, AT&T , IBM and Wal-Mart, along with 20 small businesses like TheLadders.
NEXT: STEP 4: Get cozy with customers